Mortgage Loan Originator (MLO) Licensing Practice Test

The requirement under Regulation X mandates that certain disclosures be provided to applicants within specific timeframes to ensure transparency and informed decision-making. The correct answer, which is the Mortgage Loan Servicing Disclosure, is particularly important because it informs borrowers about the potential for their mortgage to be serviced by a different company than the one that originated it. This disclosure is crucial for helping consumers understand their rights and what to expect during the loan servicing process.

The Mortgage Loan Servicing Disclosure must be delivered within three days of application to allow borrowers to be aware of who will be responsible for managing their loan, thus providing them with essential information as they make their borrowing decisions.

In contrast, the Loan Estimate is required to be provided within three business days of receiving a loan application, but it focuses on the terms and costs of the loan rather than servicing details. The Closing Disclosure is given later in the process, specifically at least three business days before closing, to inform borrowers about the final terms of the loan. The CHARM Booklet is also provided in specific circumstances, particularly for adjustable-rate mortgages, to give borrowers an understanding of how those loans operate but is not mandated to be provided within the first three days after application.